When youíre caught in a tough financial situation, you may need an immediate loan or credit to help you out of it. Singapore laws allow legal moneylenders to act as a legitimate channel offering loans to people in dire need of money.
In recent years, the government has also introduced new standards for these lenders. The set interest rate of 4% is one of them, weeding out lenders abusing the system to charge exorbitant rates.
Yet, not all moneylenders are the same. Before applying for the loan, you may look at a list of licensed money lender companies operating in the country. Here are some parameters to find the most reliable moneylenders in Singapore.
1. License and Certification
The Ministry of Law regulates the money lending businesses in the country and formulates laws to protect the borrowers from loan sharks. Currently, Singapore has 156 licensed lenders mentioned in the Registry of Moneylenders. You should cross-check the lenderís name and license number on the registry before applying for a loan.
Remember that these licensed moneylenders have to comply with several rules and regulations to operate as legal entities. These include:
- Restriction on Loan Amount: The licensed and legal moneylenders in Singapore can lend not more than $3000 for people earning $20,000 annually. If you earn more than $20,000, the moneylender can offer you credit amounting to six times your monthly income.
- Ceiling on Interest Rates: The government restricts licensed moneylenders from charging interest rates higher than 4%. On the other hand, loan sharks ask for exorbitant rates, as the government doesn’t regulate them.
- Restriction on Fee Charges: Apart from interest rates, licensed moneylenders in Singapore canít charge more than $60 every month as the late repayment fee. The service charges canít exceed 10% of the loan principal.
- Mandatory to Have a Physical address: Every licensed moneylender in the country must have a physical office and website, confirming their legitimacy.
2. Loan Application Process
Although moneylenders are allowed to draft their loan terms and processes, there should be adequate transparency in the process. The laws also require these lenders to clarify their terms and conditions using simple and comprehensive language.
Check the loan agreement properly before signing it. The document must cite interest rate charged, loan repayment amount, and other charges applied by the lender.
Most lenders allow online applications and ensure faster approvals if you meet all the requirements. A hassle-free process will put you at ease when going through a difficult phase in your life.
3. Flexible Loan Repayments
Before taking a personal, payday, business, or bridging loan in Singapore, donít forget to check the loan repayment plans offered by the lender. Choose a lender offering flexibility in repayments. You can negotiate the term of your loan. Some lending companies are considerate of the financial hardships and specific needs of the borrowers. They offer flexible tenure even for customers with poor credit ratings.
4. No Hidden Charges
Reliable licensed moneylenders have to follow legal limits set by the Ministry of Law for the fees they can charge. Unlike loan sharks asking for unnecessary charges, there are no hidden expectations when dealing with a licensed moneylender.
These lenders have legal restrictions to charge not more than $60 for each monthly repayment. They can charge legal costs within the ambit of court orders on a successful claim for loan recovery. If you find any suspicious fee or charge in the contract, ask the lender to explain it and cross-check if the fee is genuine and legal.
Here, it is worth mentioning that unlicensed loan sharks can cause a lot of damage to your financial conditions and even endanger your life. Also called ‘Ah Long’, these lenders charge high-interest rates and unwanted additional charges to dupe the borrowers. And if a borrower fails to repay the loan on time, loan sharks use violence and threats to recover the amount.
5. Proper Documentation
When you go through the list of licensed money lender businesses in Singapore, don’t hesitate to check if their documentation is complete and in a written format. A legal lender will ask you to sign a proper legal contract stating the terms of your loan in a clear, concise manner. If a lender refuses to provide a written contract with a courtís seal, consider it a red flag. Unless you have all the terms in writing, donít sign any papers.
Here, remember that licensed moneylenders will also ask you to submit several documents and check your credit health for background checking. It shows that the lender is legitimate and not cutting any corners in the process.
You can find a trustworthy moneylender in Singapore to meet your financial obligations with these parameters in mind. Also, keep all loan-related documents safe for future references.